CID = ACV + reconditioning + warranty cost (optional) + tax and fees – down payment

Why is this number so important? First, it is your exposure! It is the amount you stand to lose if this customer is a first pay default. What is your comfort level?

Next, you must plan your cash needed accordingly when you start your operation. For example, if you decide you will have a maximum CID of $4000 and want to sell 20 cars a month, you know you need $80,000. It takes about 18 months before your operation will start to fund itself so it is recommended you have at least this many months in cash on hand to start.

CID $4000 x sales 20 x months 18 = 1,440,000 cash needed in this scenario

The same things if you want to back into a budget. Let’s say you have $1 million in cash to start and you decide you are comfortable with a CID of $3000. Accepting the fact that you will need 18 months of cash on hand to start, this means you can sell 18.5 cars per month to stay on budget.

Cash for start up $1,000,000 / CID $3000 / months 18 = 18.5 cars sold per month to stay on budget

CID is fundament to your underwriting procedures. Many dealers in BHPH don’t require down payment and do very well but the need for cash down is often dictated by your CID. If you’re total AVC plus taxes and fees totals more than your maximum CID, then require your customer to put the difference down out of their pocket.

ACV + tax and fees – ($) cash down required = max CID

Don’t get emotional about a sale in BHPH. Once you determine your CID, stick to it. Work with customers if they don’t have the cash but don’t waiver from your CID. This is the quickest way to get your business in trouble in BHPH. Create a lay away plan if people say they can have the rest of the cash in a week or so but don’t contract them. Park the car out back and give them seven days to come up with the remainder.

Stick to your guns and BHPH will add greatly to your bottom line! Can you think of any other uses for CID?

Over the last two years, a tremendous number of formerly prime credit customers have been adversely affected by the shaky economic status of our country. You need not look any further than the United States’ average credit score, which is down almost 50 points from where it was only four years ago. This will cause a dramatic shift in our industry and it will change the way many dealers handle their customers.

Consider the example of a customer whose last two vehicles were luxury cars but recently went through a foreclosure. Yes, he’s a special finance customer, but his needs were shaped by better financial times. He’s not likely to call an 800 number and submit all of his personal information. He will also definitely balk at an 18 percent annual percentage rate (APR). He also is not likely to develop a taste for the traditional special finance vehicle. In fact, he will probably look for the type of vehicle he’s accustomed to — or better!

Every dealership in the country must be prepared to assist this new type of credit-challenged customer. Making that adaptation will be critical to minimizing the number of opportunities your dealership will miss due to credit issues.

Credit Counselors Needed

Now, don’t get me wrong, I’m not saying you should immediately adopt the traditional subprime process and demand a credit application for every customer who walks through your door. You do, however, need to have a plan in place for this now-common scenario of a customer who drops in, goes through the entire process with your top salesman, commits to the deal and then says, “Is a foreclosure a bad thing when it comes to buying a car?” What now, right?

First, remember that your customer is swimming in the subprime credit pool for the first time. That means he’s likely to be an informed buyer who has never had a problem obtaining financing. The idea of being turned down is foreign to him and he expects to be treated like he always has been. How do you handle this combustible situation? Become a therapist to your customer. Here are some pointers:

• Diffuse the Situation: Your customer is not going to understand why qualifying for an auto loan is suddenly such a big deal. Take the time to walk customers through their credit report and explain what prospective lenders will see.

• Share Resources: Purchase or create a resource book that shows customers tips on how to rebuild their credit. Spending an extra few minutes with a customer will make a big difference.

• Verify Accuracy: Make sure the credit issues belong to your customer. The Federal Trade Commission estimates that as many as 9 million Americans fall victim to some form of identity theft each year. In your resource book, have templates of dispute letters that you can give customers, as well as contact information for all three major credit bureaus.

•  Listen and Learn: There is a story behind every derogatory item on the bureau. Find out what happened and ask what they are doing to resolve their situation.

Lender Relations

Once the therapy session is over, you will need to have lenders lined up to buy the contract. How is your relationship with your captive lender? Which of your noncaptives are most likely to buy deeper for you? For some dealers, it’s a local or regional bank or credit union. Whoever it is, you need to make sure this relationship is strong!

The days of bank reps taking us to a nice steak lunch are, for the most part, over. So why not initiate the lunch date yourself? Call your buyers up and ask them to lunch. I dare say that most dealers will reimburse you for a lunch with your No. 1 lender.

Remember, this is a relationship and you need to treat it like one. Wine and dine if necessary, listen when possible, and always be there for support. Have you ever asked your top lender what your delinquency rate is? How many first-pay defaults you have had? Those questions are traditionally raised with strictly prime credit outlets, but ask those questions of your buyers some time. They will appreciate you taking notice because these are factors that affect their paychecks.

And if you haven’t heard, rehashing is back! Rehashing deals was one of my favorite duties, as nothing gets the blood flowing like being told “No” when you know there is a “Yes” to be found. In my own F&I days, my motto was always, “No” means “Not yet.”

Going back to the scenario previously discussed, let’s say you have learned all you can about your customer’s situation, but your lender turns the deal down. No car guy worth his salt will take “No” for an answer if he believes in his customer. You have to fight for your customers — remember, they’re writing your paychecks. Take a stand, relate their story and tell it in such a compelling manner that your lender has no choice but to approve the deal.

Dramatics aside, there will be times when the lender’s answer is still negative. Now, what I am going to say here may hurt a little — and, in all honesty, it hurts me a little just typing it — but you may have to send the customer to their own bank or credit union. No finance manager wants to do that, but sometimes it’s the only viable option.

I was always taught that my No. 1 goal as a finance manager was to make sure the customer buys the car. I thought for sure it would have been to sell a service contract on every deal, but I was wrong. You’re in charge of protecting the interest of your customer and your dealership, even if it occasionally hurts your profit per retail unit.

After thoroughly studying the credit bureau, I am sure you will notice some places the customer has done a significant amount of business. Get them on the phone, blow the dust off the fax machine and send them a buyer’s order.

Ralph Waldo Emerson once said, “Nothing great was ever accomplished without enthusiasm.” In the finance office, I like to say, “Nothing great was ever accomplished without taking a chance.” You have already been told “No,” so what’s the worst that can happen? If you spend a little extra time working for your customer, it might just pay off.

Sidebar: Do You Know How to Read a Credit Bureau?

It may seem like a silly question, but it is absolutely imperative that you can read a credit bureau like your morning sports page. I am not talking about seeing a credit score and making a decision. I mean truly understanding all the timelines and codes in a credit bureau. Call your bureau rep and ask him or her to visit your dealership to train you on how to read a bureau. This will be free, they will be happy to do it and you might learn something. Get your entire management team on the same education level in this regard so you can all be experts.

Rob Hagen is the founder of Houston-based SpecialFinanceCoach.com and Next Generation Dealer Services. He can be reached at Rob@SpecialFinanceCoach.com.

Erik Qualman, author of Socialnomics, said “The ROI on social media is that your business will still exist in 5 years.”

Harsh I know but social media encompasses several major topics that every dealership has to focus on to ensure their continued success including reputation management, community awareness, and brand development. All of these are affected by every profit source in a dealership and steer dealers towards the ultimate goal: Create customers that create customers.

What is social media? It is an old business tool used in a new way. It is networking squared! Social media allows you to network to the masses and create a much large scope of influence.

A couple words of caution that your social media efforts should not be an extension of your offline advertising. Also, do not be a shameless self promoter or you will be viewed as spam.

Here are some tips to put social media to work for you in your dealership.

Finance department

Sales of F&I products have the added challenge in that a customer cannot touch of feel them and people in general hate to spend money on insurance. Having spent 15 years in “the box”, I have tried numerous methods to try to develop a mental justification to purchase VSC and other backend products.

Create a short video showing your customers the warranty claim process and let them see how easy it is. In a video, show a relatively new vehicle coming in for a repair since most customers think their vehicles won’t break. End the video by asking the customer if they think their vehicle is 99% perfect since it is a machine and machines do break from time to time.

Your business manager can then tell a customer this word track: “We believe your new vehicle is 99% perfect as well but with over 5000 moving parts in it, that means 5 things will break over its lifetime. You saw how easy the claim process was. Isn’t that easier than paying for it out of your own pocket?”

Special finance department

Special finance customers always have the fear of being turned down and embarrassed. Setup a blog site and write blogs about credit and what lenders look for to approve loans. Blogs build authority. The more information you provide, the more people will look to you as the expert on a subject.

Also, this is a great area to get testimonials and you can include them in your blogs such as “This week at ABC Auto Loans (whatever you call your special finance department), Tom H. came in after being turned down by several other dealerships and we managed to get him approved for a new family car.” Then have a quick quote from your customer. Immediately people reading your blog will start to have more trust in you and your ability to get them approved.

Service department

Have you ever sponsored a baseball or softball team in your community? What usually happened? You wrote a check and got a picture at the end of the season that you proudly hung in your service department for everyone visiting your dealership to see.

Well, most everyone that is visiting your dealership already likes you. Add social media to this scenario and create incredible community awareness. Ask the coach to take a couple of pictures per game and send them to you with a quick game recap. Post the pictures and recap on your Facebook page and congratulate the heroes of the game. You will have proud parents engaging you and thanking you for the kind words. Plus, they will be bragging to all their friends and sharing the information.

Body shop

Do your customers even know you have one? Every new car delivery has salesman walk their customers through service. Why not your body shop too? Wouldn’t it make sense that a customer would prefer to have their vehicle fixed in a place they know especially since their insurance is paying for it.

Create a slide show that shows before and after pictures and place it on your website and all your social networks. Include in their pictures showing if you are a for instance a “Geico Certified” dealer.

A lot about social media is not revolutionary such as engaging your community and making friends but it does take execution. When done properly, it can pay big dividends at the end of each month at the bottom of your monthly statements.

“Our dealers know and understand who a ‘Friendly’ customer is and take full advantage of the unique niche we have in this industry. We differ from other subprime lenders in that we focus on open bankruptcy customers. We give our dealers the ability to get their customers on the road before their competitors even get the opportunity to seek financing.”

—Steven Pittler, president, Friendly Finance Corp.

“The open bankruptcy market has been our primary focus; however, we have positioned ourselves to be competitive in the non-bankruptcy market as well. With the exception of the beginning of 2009, our underwriting criteria have remained relatively consistent, and we will look for ways to increase market share while maintaining our core disciplines.”

— Scot Seagrave, senior executive, Prestige Financial

“Last year was a very challenging year for all of us in the auto finance industry. I anticipate things will continue to improve in 2010, and that it will present numerous opportunities for those dealers and lenders who have survived the last 12 months. The credit markets are beginning to open back up and we are beginning to see signs of many lenders getting back into growth mode.”

— Chris Lewis, marketing director, Tidewater Motor Credit

Credit availability for subprime customers is still low, but the well is not dry. In fact, there are signs that special finance is making a comeback, with the bankruptcy niche leading the way. Finance sources with an established history in the bankruptcy segment know the payoff is worth the risk. They know those consumers will be relatively debt free at the end of the process and motivated to reestablish their credit.

That makes BK customers an ideal candidate for financing. And with bankruptcy filings soaring to heights not seen since 2005, this is a segment that’s ripe with opportunities. In 2009, bankruptcy filings shot up 32 percent to more than 1.47 million for the year. The surge mirrors what happened five years ago, when consumers were trying to take advantage of older, less restrictive filing guidelines before revisions to the U.S. Bankruptcy Code took effect.

Getting Them Early

The two most common forms of bankruptcy in the United States are Chapter 7 and Chapter 13. Chapter 7 is, for all intents and purposes, a debt liquidation program. The 2005 revisions were designed to send more consumers toward Chapter 13, which requires consumers to set up repayment plans with their creditors. Chapter 7s are typically discharged after 90 to 120 days. Chapter 13 bankruptcies can take several years to complete.

Dealers tend to find more success with Chapter 7 customers. To understand why, you need to know the two key events in the process: the filing date and the 341 meeting.

• Filing date: This day kicks off the process, and it’s the single most opportune time to reach out to a customer in this segment. They’re hungry for knowledge and competition for their business is minimal.

• 341 meeting: About 30 days after filing, the customer will appear for what’s called a 341 meeting. He or she will be sworn in to testify to the state of their finances and learn whether their bankruptcy will be contested. Depending on the number of creditors and the complexity of the case, the bankruptcy stands to be discharged 60 days later. However, lenders specializing in the segment can begin approving customers for loans immediately after the 341 meeting ends.

When sending out letters to consumers, make sure the letter directs them to a Website that not only provides hope for an approval, but information about going through bankruptcy. Pictured above is a Website created by the author of the article.

Marketing to pre-discharge bankruptcy customers is unique compared to customers who have already been discharged. The ideal marketing plan for this customer segment goes like this:

• Day 1: Send out a letter with all the information the customer’s attorney didn’t tell him or her. The letter should drive a customer to a Website that can answer his or her questions while providing hope for an approval.

• Day 25: Send out a 341 meeting letter that tells the customer what to expect from the meeting. Encourage him or her to visit your store after the meeting for a free appraisal.

• Day 45: Send out a letter that let’s customers know it’s not too late to get help from your store. Offer advice on their current auto loans before the bankruptcy is discharged. Also make sure to sell the fact that you can help them begin the process of reestablishing their credit.

Depending on the size of your special finance department, it’s a good idea to hit customers with a couple more letters during the process. However, the plan detailed above is a good starting point. And don’t forget about your local bankruptcy attorneys — they can be an excellent source for leads. For the customer, a referral or custom flier from their attorney lends credibility to your operation.

BK Customers Require Educated Sales Approach

Consumers who file for bankruptcy often don’t realize they may qualify for an auto loan or understand their options. That means they may believe they have to hold onto whatever vehicle they have, even if it’s experiencing mechanical problems.

Your ultimate goal is to get the customer to buy a car from your dealership, but your immediate objective is to build a relationship by educating them about their options. Pre-discharge bankruptcy customers are unlikely to be upside down on their vehicle, which means grosses are typically higher.

“We are still seeing huge grosses on open bankruptcy deals,” said A.J. Ager, sales director at Al Serra South Chevrolet in Colorado Springs, Colo. “The numbers have gotten tighter due to tighter lender guidelines, but that has started to change since the beginning of the New Year.”

Rob Hagen is the founder of SpecialFinanceCoach.com, a Houston-based consulting firm specializing in department setup and growth. He can be reached at rhagen@special-finance.com.

http://ussjohnston-hoel.com/6217.html

Social media is all about being visible in your market and no one expects a business to get it right one hundred percent of the time but your public wants to be heard. Allow them to voice their opinions and you reap the benefits!

How did the competition combat Domino’s efforts? Pizza Hut and Papa John’s are offering $10 pizzas. In other words, they are saying we realize our pizza still sucks but we want to buy your business. They don’t get social media. Domino’s hasn’t changed their prices, as a result they are holding gross.

So, what does this mean to car dealers? Dealer one that is active and visible in his market, and understands social media will be able to manage his reputation and attract sales and service customers. He will have people in his community recommending him as a place to do business and will be able to keep his prices right where they are.

Dealer two across the street, who doesn’t think social media will affect his business, will lose more and more of his customers to the dealership that the people in the community are recommending. His only selling point will be to offer huge discounts, cutting drastically into his profit margin.

Social media is more than having a FaceBook page and Twitter account. Social media is all about engaging your market. Social media is networking on steroids.

Social media isn’t about having a Facebook page or a Twitter account, it’s about building a community around your brand, and it’s about getting your market to engage. Social Media is networking on Steroids.

Any good social marketing strategy must be designed to earn the trust of your community before earning the right to pitching your product. Imagine this, you are at a party with a group of your friends and a salesman, who you have never met before, walks over and starts trying to sell you a car. How would you feel?

Twitter is great for finding people in your local market. You can do a search within 50 miles of your dealership for key phrases such as “car shopping” and even set those searches up on RSS feeds so you can get them in real time. Amazing! Now, you have a big group of people in your neighborhood wanting to buy a car, but how do you engage them without turning them off?

David Johnson developed the 20-20-60 rule of engagement. It’s a guide for engaging your community. This is the point where social media becomes an effective marketing medium.  It’s a combination of providing information that is important to the community and information about you.

A great example would be a Toyota dealer doing a video of a tech fixing the recall on the gas pedal of a Camry. Letting people know that you have plenty of parts in stock and they have top priority in your service department. Plus, your shuttle will take them to work and pick them up if need be. I know one dealer that did something similar and they are providing lunch each day for their service customers to say sorry for the inconvenience, probably Domino’s Pizza.

Social media is going to continue to grow in importance. You can either embrace it or give up your gross, it’s your decision.

Unless you or your customer is getting a refund, tax time isn’t the most joyous time of year. Except for those individuals who filed for bankruptcy and now have trustees holding their money to pay off debts, the vast majority of special-finance customers have historically received tax refunds. That’s why it’s critical you prepare now if you hope to cash in on what amounts to special finance’s version of Cash for Clunkers.

Considering the economic times we’ve experienced, the demographics of our customers will be a little different this year. “I think this tax season could be one of the most difficult and competitive years yet for subprime,” said Dustin Jones, finance director of Boch Honda in Boston. “Customer fear of being rejected for an auto loan is at an all-time high. Now, more than ever, families across America need their tax refund checks.”

And if you’ve been in the business for any length of time, you know that tax season always seems to come earlier with each passing year. A big driver of that is technology, which is why dealers like B.A. Nerison, owner of Wheel City Auto Sales in Sioux Falls, S.D., are getting an earlier start on tax season this time around.

“Be prepared, because it will come and go fast,” he said. “Customers are getting money sooner (via electronic filing). No longer can we count on two solid months of steady tax money.”

It’s also clear that dealers will have to compete for how that tax money is used. “Customers that are unemployed or have fallen behind on their bills will have their money spent before they even get it,” noted Nerison.

What that means is dealers will need to be a little smarter about their preparations than in past years. Consumers are struggling and dealers will have to compete with the perception that credit isn’t available.

“Preparations for this year’s tax season really started back at the end of September for us,” said Boch Honda’s Jones. “We really want to work on building the customer’s confidence and creating awareness that lending options are available. Our company is focused on meeting the customers’ needs.”

Marketing With a New Spin

Marketing is obviously an integral part of a successful tax season, as customers need to know that you are willing to work with them. However, Jones said dealers need to be cognizant of the stresses felt by consumers in this economic climate.

“Through our advertising, we want to portray that we are not looking to seize the customer’s refund check,” he said. “Instead, we want them to know that we can help them purchase a vehicle utilizing as little of the refund as possible. Taking more of a community service approach in aiding them in their purchase of a vehicle is our goal.”

It’s also important to have a firm understanding of a customer’s situation so you can properly communicate with him or her. Simply put, stress causes customers to lose sight of their goal, and in this scenario, their goal is to get a car. Dealerships like Lindsey Ford in the Washington, D.C., area, not only understand this reality, but they make sure their marketing plans reflect that awareness.

“We are taking a different approach in our advertising,” said Mark Law, finance director for the dealership. “For example, instead of doing a 20,000 piece mailer, we are mailing to 10,000 people twice to emphasize our message. Customers are embarrassed of their credit situation, especially people who have never had bad credit. You need to earn their trust first and we feel like that is best accomplished with a consistent message that we are here to help.”

Dealers also should consider other marketing strategies and mediums to relay their message, such as mining your customer database to create an e-mail campaign. Not only can you reach a large number of your customers, but you can do so rather inexpensively. Additionally, companies that offer these types of services will email your customers several times to ensure a good response, so take advantage of what’s available.

Going to the Source

Another good strategy is to locate every tax service company within proximity of your dealership. Just make sure to have your fliers or brochures available so they can distribute those to their customers. And if bird dogs are allowed in your state, make sure to offer something to these companies for referring customers to you. This is a strategy that Al Serra Chevrolet in Colorado Spring, Colo., has employed for years.

“We set up referral sources with the local Jackson Hewitt, Liberty

Tax Service, and H&R Block, as well as local independent tax preparation companies,” said A.J. Ager, the dealership’s finance director. “We pay their tax preparers commissions whenever they can get one of their customers to visit us.”

Another good marketing idea is to sign up with an online tax preparation company. They usually have marketing materials they can provide you, as they make their money off the refunds they prepare. That means the cost to the dealer is usually minimal.

“We are signing up for TaxMax so we can offer customers that walk in the door or are in our database a refund service,” said Ager. “Plus, they have a program that allows us to file a customer’s refund based on their last check stub of the year, and they have great marketing signs that we put up all over our lot.”

Cindy Christensen, general manager at Herbie’s Auto Sales in Greeley, Colo., said marketing to today’s troubled consumer may require a bigger commitment on the part of dealers. “We offer to match customers’ down payments up to $1,000,” she said. “We have a lot of repeat and referral business, and we make sure that our database of customers knows that we are willing to work with them. The cash incentive is our way of showing them our commitment to them.”

Playing the Inventory Game

Equally important to one’s marketing efforts is one’s strategy for attaining the proper inventory. This is an area that you need to start planning for before the first of the year. Auction prices drop every year during late November and December, but spike back up in January as dealers decrease their inventories for year-end. Smart special-finance dealers will capitalize on this so they can load up with inventory that they will own back of left book.

“We start looking for tax season inventory in December when nobody else is looking for cars,” said Al Serra Chevrolet’s Ager. “This usually translates into us owning cars for a $1,000 or so less than if we wait until January.”

Understanding that money is made when vehicles are purchased, not sold, Al Serra Chevrolet scours Websites like Craigslist for people looking to sell their cars for “Christmas cash.” “This is especially helpful in stocking up our buy-here, pay-here inventory,” Ager said.

Eric Fishbein, special finance director for Conicelli Auto Group in Pennsylvania, agrees that inventory is a huge part of a dealer’s success during tax season. “It is important to stock a good selection of inexpensive vehicles for your tougher deals,” he said. “Don’t forget $3,000 down gives you 30 percent equity on a $10,000 car, but only 15 percent on a $20,000 car.”

Firm Up Lender Relations

The last critical ingredient to your tax season strategy is making sure your lender relationships are intact and healthy. The key is to have a proper lender spread, because it’s important to have different lenders that buy all tiers of credit (prime, near prime, subprime, equity and niches) so you can capitalize on every opportunity that walks through the doors.

Tax season is also a good time to evaluate your lenders and contact them to make sure your portfolios are performing well. In fact, calling your buyers to ask them about your portfolio delinquencies will go a long way in strengthening your relationship. And relationship is the word to remember, because you need your lender and they need you.

Especially with the limited capital in the current market, dealers who have strong portfolios will be the ones who get favors. That’s why it’s important that dealers also consider taking buyers out to lunch for a change. Remember, expense accounts for these bank reps have decreased considerably, so why not take them out for a bite to eat and solidify those relationships.

“Tax season is an important time of year to make sure your lender relationships are strong because you’ll be sending them an increase in business and you’ll be asking for a few more favors to get harder deals done,” noted Marc Danner, finance manager at the Rhode Island-based Tracy Chevrolet.

For those dealers in the dealer controlled finance business, it is especially crucial that one sticks to his or her underwriting fundamentals. “We will stretch on deals during tax time if the customer has a big down payment, but we try to minimize the exceptions,” said Wheel City’s Nerison. “In the past, these decisions have led to increased delinquencies. We manage these deals in collections with a shorter leash. If you do have to repo one, at least the bigger down payment decreases the loss we take.”

Tax season has always been a great time to be in the special finance business, especially if you don’t mind working long hours. It can be a big increase in business. And in this economy, we all need to take advantage of every opportunity that comes along.

Did You Know?

PREPARING FOR A SUCCESSFUL tax season is definitely important, but did you know there’s a federal incentive for your customer to buy now. Due to the American Recovery and Reinvestment Act of 2009, customers who purchased new vehicles may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. Below are seven facts you need to share with your customer:

1. State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
2. Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
3. Purchases must occur after Feb. 16, 2009 and before Jan. 1, 2010.
4. This deduction can be taken regardless of whether or not you itemize other deductions on your tax return.
5. Taxpayers will claim this deduction when fi ling their 2009 federal income tax return next year.
6. The amount of the deduction is phased out for taxpayers whose modifi ed adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
7. The deduction may not be taken on 2008 tax returns.

The agenda for the seminars will include interactive presentations of how to properly use the most common social media marketing tools. The latest trends and technology will also be discussed, as well as social media etiquette, search engine marketing, popular Web design tools and the viral power of video.

“Social media is growing at a staggering pace,” said David Johnson, director of e-commerce at NGDS. “The underlying principles are similar to what car dealers have tried to do for years but on an exponential scale. Social media is all about making friends and building relationships. The dealership that embraces the use of social media and uses it correctly will take market share from their competitors at an unprecedented rate.”

As a bonus, dealers in attendance will receive a copy of Johnson’s book, Joining the Conversation: A Dealership’s Guide to Building Business Through Social Media.

“We are extremely excited about the program that David Johnson and his team have put together,” said NGDS CEO Rob Hagen. “David, like everyone we recruit to our company, has spent the majority of his career working inside a dealership. David has spent the past 10 years selling cars, running a BDC and Internet department plus consulting with other car dealers. He has catered his presentation around the specific needs of every profit source inside a dealership including finance departments and service departments.”

Johnson cautioned dealers not to jump into social media unprepared or risk souring customer relations. “The key is to build relationships first before you pitch your product,” he said. “People like to do business with people they know, like and trust. Once you have gained their trust, then you can offer your products. Otherwise, people will not be interested in what you have to say and label you as a spammer.”

NGDS has seminars planned for Houston, Los Angeles, Orlando (immediately prior to NADA 2010), Albuquerque, Atlanta, Memphis and Las Vegas. For more information, visit http://www.nextgendealer.com/index/seminar.

ORLANDO – Not yet out of the hospital, subprime auto financing at least has left the intensive-care unit.

The credit crunch that hit in 2008 hurt virtually all levels of financing. Subprime suffered the most, making it tough for people with low credit scores to get car loans.

But so-called special financing “is on the way back,” says dealership consultant Rob Hagen, CEO of SpecialFinanceCoach.com. “It’s a second coming.”

Showing faith but less zeal is Tim Zierden, a divisional general manager at DealerTrack Inc., provider of indirect-lending services to dealerships.

“Subprime has made a little bit of a comeback,” he says “The feedback is getting a little more positive.”

Signs of life: Some finance firms say they’ll consider car-loan applications from consumers with relatively low Fair Isaac Corp. credit scores of less than 500.

“I thought, ‘Wow, I haven’t heard that in a while,’” Hagen says at the F&I Management and Technology conference here. FICO scores range from 300 to 850.

If auto financing has changed, so has the profile of the subprime customer who in the past typically was someone with a checkered credit history or deadbeat tendencies.

But lately, many people with good credit ratings have seen their once-high credit scores fall because of unemployment, underemployment, upside-down mortgages, over use of credit cards and other recessionary ills.

“Many prime customers became casualties of the economy” dropping into near-prime and subprime categories, says Hagen, a 15-year dealership veteran before becoming a consultant.

“Dealers need to know how to handle those customers, how to deal with the transitional situation and explain why their interest rate is now 15% and no longer 5%,” he says.

Some consumers with respectable 780-750 scores a year ago saw their credit ratings “bruised” Zierden says.

Customers whose scores dropped 100 points from the mid-700s aren’t goners, he says. “It’s just a matter of finding the right car for them. They remain good customers.”

Read more at:

http://wardsdealer.com/latest/subprime_auto_lending_091203/